Lisbon, March, 31 2026 (Lusa) – Portugal's Finance Minister, Joaquim Miranda Sarmento, dismissed on Tuesday the possibility of lowering VAT on food products during a parliamentary hearing, saying that it would be absorbed by the production and distribution chain rather than helping consumers.

Addressing the Committee on Budget, Finance and Public Administration (COFAP), he said that it was relatively well established in the economic literature that VAT cuts on non-regulated goods, such as food, often led to savings being captured by producers and distributors.

In response to the issue raised by far-right Chega MP Eduardo Teixeira, Miranda Sarmento said that if he believed tax relief resources should be channelled towards the industry instead of the public, that was a policy choice for his party to make.

His justification follows a statement made by the prime minister on 27 March, confirming that interventions regarding VAT for fuel or the basic food basket were not currently under consideration.

Miranda Sarmento also rejected claims that the state was profiting from increased VAT revenue due to rising diesel and petrol prices, saying that taxpayers were currently benefiting from a corresponding discount on fuel tax.

Additionally, he said that the state was not profiting from VAT on fuel, explaining that while price increases resulted in higher VAT revenue, that surplus was offset by the fuel tax. 

The discounts of nearly 10 cents on diesel and 5 cents on petrol represented the exact amount of additional VAT generated by the price hikes, which was then reduced via the fuel tax, he said, pointing out that the same mechanism had been applied in 2022 by the government of António Costa (Socialist).

Commenting on data Statistics Portugal (INE) released on Tuesday, which showed inflation rising to 2.7% in March, Miranda Sarmento described the figures as clear, saying the increase was a direct result of rising fuel costs.

PCT/MYAL // ADB.

Lusa